Handling cash requires you to keep change on hand, increases your risk of theft, and may not be as convenient as accepting only credit cards or checks from your customers. On the other hand, a cash-only policy might alienate customers who don't like to carry a lot of bills, but also means you don't have to pay credit card fees or risk bounced checks. How you handle cash depends on the type of business you're in and how your customers shop.

Cash Only

Small businesses appreciate the simplicity of operating on a cash-only basis. You don't have to apply to a bank to process credit cards, you don't have to pay for the equipment to use credit cards and you don't to pay the percentage banks charge for every credit card transaction. But as more people rely on cash or debit cards to pay for day-to-day transactions, you risk losing customers if you don't accept plastic. If you decide to only accept cash from your customers, you should post prominent signs to this effect to avoid embarrassing customers who aren't prepared. You might also include directions to the nearest bank cash machine, or contract with a bank to install an ATM in or near your store, to make it easy for customers to access cash.

No Cash

Though cash is legal tender, no law requires businesses to accept it. Just as the law allows businesses to decline large bills or payment entirely in pennies, you can set a policy for your business that you'll only accept credit or debit cards. Some airlines do this for in-flight purchases, and other businesses have followed suit. A plastic-only policy means you don't have to carry a physical deposit to the bank, you don't have a lot of money sitting around tempting thieves, and you never have to make change. To avoid upsetting customers, you should post large notices of your plastic-only policy.

Cash Handling -- Customers

If you do decide to accept cash at your business, some simple precautions will reduce the chance of fraud. Train your employees to look for and recognize counterfeit bills. Your local bank or police department can provide you with training material or tips. Encourage employees to contact a manager if they suspect phony currency. Train your employees to conduct only one transaction at a time. Otherwise, thieves may try to distract an employee from the cash drawer by interrupting a transaction. Employees should always close the cash drawer between transactions. Thieves may also claim to have paid with a larger bill than they did, so employees should keep the payment on top of the register drawer, in sight, until after they've made change. If you accept more than $10,000 from a single customer in one transaction, or in two or more related transactions, you must report this on IRS Form 8300 and include the customer's name, address and Social Security number.

Cash Handling -- Employees

Give each employee a cash drawer and make them responsible for the cash in that drawer. Have one person set up the drawer and another count the drawer at the end of the day and balance it against the register. Managers should sign off on refunds and over rings. An employee who makes a lot of these mistakes may be pocketing extra cash. Ask employees to periodically collect large bills and accumulated cash in their drawer and deposit it in a drop box. This keeps cash from building up the register.

About the Author

Cynthia Myers is the author of numerous novels and her nonfiction work has appeared in publications ranging from "Historic Traveler" to "Texas Highways" to "Medical Practice Management." She has a degree in economics from Sam Houston State University.